The Securities and Futures Commission (SFC) hopes for statutory backing for the takeovers and mergers code, allowing it to take civil action seeking compensation for small shareholders suffering losses arising from failed offers. Commission deputy chairman Laura Cha May-lun said after a seminar in Dalian that the watchdog wanted tougher penalties for collapsed general offers where investors incurred losses. In 1995, Charter View proposed a general offer for Tungtex Holdings, but the deal was withdrawn three months later. Investors suffered when Tungtex shares dropped after the deal failed. 'Currently, the SFC will only give a private or public reprimand or in extreme cases a 'cold shoulder' to offerors alleged to have misled the market. 'If the takeovers code had statutory backing in this area, the SFC or investors could take civil action against the offerors to compensate small shareholders for financial losses. It will help to put teeth into the code and increase protection for investors.' She said the commission only wanted to see statutory backing for part of the code, rather than having it for the whole code. 'If the whole code had statutory backing, it would lose its flexibility and cases would always need to go to court, which would be quite costly.' She said the SFC would examine similar operations overseas before making a final decision. She added that the commission and stock exchange had also set up a working group to seek statutory backing for some listing rules.